Inabox calls for greater NBN competition


Transcription of Finance News Network Interview with Inabox Group Limited (ASX:IAB) CEO Damian Kay

Donna Sawyer: Hello I’m Donna Sawyer from the Finance News Network and joining me from telecommunications wholesaler, Inabox Group (ASX:IAB) is CEO, Damian Kay. Damian welcome to FNN.

Damian Kay: Thank you, I’m glad to be here.

Donna Sawyer: Let’s give some background to our viewers. What is the primary purpose of the NBN (National Broadband Network)?

Damian Kay: Well NBN was really brought about, you know, a big infrastructure build for Australia that addressed some key sort of things for the future for Australia, such as faster broadband and bringing productivity. So things like open access, wholesale only to promote competition. What they call equivalents, so that there was no discrimination so that anybody could access the NBN Network. And first and foremost, the end users were able to get a more reliable and faster service, and it was available to everyone no matter where you lived, which was the primary premise of NBN.

One of the challenges that we’ve got with NBN, is that I don’t think the Government has actually delivered on those original expectations. Or NBN haven’t delivered on those original expectations. You know, we have an environment where there’s 120 points of interconnect or 121 points of interconnect, and that is a challenge. Right now you can get access off around about seven providers in the industry and under NBN, because of 121 points of interconnect, there will remain seven providers of access and that is a major challenge. So that somebody like Inabox Group with 200 service providers and we sub 50,000 connections, we’re really going to struggle to be able to interconnect into 121 points of interconnect. So it’s an oligopoly today and it will be an oligopoly under NBN, nothing has changed.

Donna Sawyer: Damian you’ve spoken at the Commons Day Conference on the NBN today. What were some of the key issues raised?

Damian Kay: Yeah look there was a number of key issues. One, it was all about the customer, so the end user. So making sure that the end user doesn’t go without service - that they’re provided with continuity of service. And those that don’t have broadband service today are able to access broadband and to make sure that they’re prioritised above everybody else. And it was kind of indicated that you know, it’s been a bit of a political stunt and making sure they’ve selected the areas that were in marginal areas. Another key aspect was making sure they bring business services as a priority, because businesses consume a lot of, you know a lot of access and that would help the business case along. And business services more, tends to be better throughput, synchronous services as opposed to asynchronous services. Another aspect was to make sure that competition continues to grow.

Donna Sawyer: Telstra (ASX:TLS) and the new Coalition Government are currently renegotiating the scope and terms for the National Broadband Network. How do you see that playing out for smaller Telco retailers?

Damian Kay: Look I don’t think it’ll actually change anything. Under the current NBN environment or under the Labor Party, we had a situation where Telstra was going to hand over access to that pit and pipe, which are the conduits and the pits and everything that all the copper runs through. That kind of has changed a little bit where we have sort of multiple technologies, to be used under a Coalition policy or a strategy. And that means that that copper network will probably be now used, and that really doesn’t anything for the end user. At the end of the day, it is access and how we access, it’s the same for everyone whether its fibre or whether it’s copper, it really doesn’t matter. So on our behalf, I guess we’re looking for the Coalition to look at the model as a whole and go one step back and sort of say, how is this being delivered and is it the right way? And making sure that the original premises of NBN about open access, equivalents and increasing competition is going to be maintained or supported under a new kind of strategy. And you know right now like I said before, I don’t think that the current environment is competitive and it’s an oligopoly. And it will stay an oligopoly while the current, you know while the current points of interconnect situation remains.

Donna Sawyer: In your opinion, what would be the optimal NBN model for the country?

Damian Kay: You know if you’re talking about competition, clearly allowing access to a bigger range of access seekers, has got to be good for competition. Now competition means lower prices, more service, better service. Right now seven, you know approximately seven to ten providers can access it because Michael Malone from iiNet came out and said, you’d have to have around about 250,000 customers to justify or to be able to support, rolling out to all 121 points of interconnect.

So a State based point of interconnect model, would allow more providers and more access seekers to be able to connect to the internet, or connect to NBN directly. And that has got to be good for NBN, it’s got to be good for competition and it’s got to be good for those providers, because right now, we are excluded from going to those points of interconnect. And that’s the major challenge.  And also looking at the CBC charges, which is effectively a tax on the end user because that needs to be passed through, and I think that’s a major challenge. And I think as long as we address those, I think we’ll be on the right track.

Donna Sawyer: Finally Damian, how does the inner box solution help the small Telco retailer?

Damian Kay: Well I mean our main premise has always been to enable anyone to access, whether it be networks or systems, or whatever it takes to be a service provider or a retail service provider in the industry. And under NBN it just means that we need to provide access to NBN, which is why I am so hard on competition and making sure we are able to get access. Because right now, we are going to have to access it through providers such as Telstra or Optus, or one of the other major players. And I think we continue to provide access to anyone that wants to be a service provider, and will continue to do that. But it is only under a regime or under an NBN model that allows us to compete.

Donna Sawyer: Damian Kay thanks for joining us.

Damian Kay: It’s been a pleasure.